Question

Write a 1-2 page (approximately 500 words) paper on : DISNEY COMPANY Part A-Fundamental Valuation: Estimate...

Write a 1-2 page (approximately 500 words) paper on : DISNEY COMPANY

• Part A-Fundamental Valuation:
1. Estimate a growth rate for your firm's Dividends per Share.
2. Assume a 12.5% discount rate.
3. Calculate an estimated value of a share of the stock using the constant-growth model (Eq. 8-6 in the textbook), also known as the Gordon growth model.
4. Compare and contrast your valuation results with the current share price in the market.
5. Respond to this question: What changes in the variables would be necessary in your valuation to best approximate the market valuation?
• Part B - Relative Valuation:
1. Estimate a growth rate for your firm's Earnings per Share (EPS).
2. Determine an applicable Price-Earnings (P/E) ratio for your firm in 5 years.
3. Calculate an estimated value of a share of the stock in 5 years using the P/E ratio model (Eq. 8-10 in the textbook).
4. Respond to this question: Would you characterize your stock as undervalued or overvalued? Explain.
5. Respond to this question: Based on your valuations in parts A and B, would you invest in this stock? Explain.

 using five year model Estimate a growth rate for your firm's Dividends per Share. 2014 2019 Rate Dividend payout 1.09 1.71 11.38% Calculate an estimated value of a share of the stock using the constant-growth model (Eq. 8-6 in the textbook), also known as the Gordon growth model. Now discount rate, 12.50% Compare and contrast your valuation results with the current share price in the market. estimated value of a share 1.71/(.125-.1138) \$    152.68 Current share price, 29-mar-2019 111.03 looking at this, it seems the stock is under priced as per Gordon Growth Model Respond to this question: What changes in the variables would be necessary in your valuation to best approximate the market valuation? If we need our calculate valuation to be very close to the market rate, then we need to consider variable growth model. So we should consider- fluctuation in prices, market fundamental, new products added in Disney's portfolio, etc. Estimate a growth rate for your firm's Earnings per Share (EPS). 30.09.2018 30.09.2017 30.09.2016 30.09.2015 30.09.2014 EPS 8.36 5.69 5.73 4.9 4.26 growth rate for four years 19.25% Price /earning ratio 13.88 16.92 15.62 19.79 19.52 Estimated share value using P/E model, = PE ratio*EPS 116.0368 96.2748 89.5026 96.971 83.1552 Actual stock price 116.94 98.57 92.86 102.2 89.03 Looking at the above results, I believe our stock is over valued as actual prices are more then calculated price Looking at the investment opportunity and considering the growth rate too. I will invest in stock as its growth looks good considering investment.

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